(Answered) Question - stock a and b have the following historical

Accounting

Question - Stock A and B have the following historical returns

Year	Stock A's returns, r_A	Stock B's Returns, r_B
2004	(18.00%)	(14.50%)
2005	33.00	21.80
2006	15.00	30.50
2007	(0.50)	(7.60)
2008	27.00	26.30

(a) Calculate the average rate of return for each stock during the period 2004 though 2008

(b) Assume that someone held a portfolio consisting of 50% of stock A and 50% of stock b. What would the realized rate of return of the portfolio have been during this period.

(d) Calculate the coefficient of variation for each stock and for the portfolio

(e) Assuming you are a risk-averse investor, would you prefer to hold stock A, stock B, or the portfolio? Why?

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